Romania hopes to realize €500 million 2011-07-28

The public offering, which opened on the Bucharest Stock Exchange this week, will close on July 22.

Romania holds a 20.6 per cent stake in Petrom, of which it is selling 9.8 per cent. The government hopes to raise around 2.07 billion lei, worth around €500 million, through the sale.

Austria’s OMV holds a majority stake in the company.

The Petrom sale is part of a larger government plan to raise 2.9 billion lei (€0.7 billion) this year on the Bucharest bourse, under the terms of a €20-billion bailout loan led by the International Monetary Fund, IMF.

Analysts are describing the sale as a significant development.

“This transaction is very important for the government, as it is short of money,” says economic analyst Ilie Serbanescu. “There is no official information yet about the subscription rates, but estimates are that the sale will be a success.”

In order for it to be completed, the subscription has to exceed the minimum required threshold of 80 per cent. This is the largest-ever transaction on Romanian capital markets.

According to media reports, the Petrom sale is being closely watched by international investors as an indicator of the government’s commitment to other sales.

Bucharest is also planing to sell a minority stake in the natural gas producer Romgaz via the stock exchange this year, though the company is not yet listed. In addition, the Economy Ministry plans to finish selling minority stakes in the utilities Transgaz SA and Transelectrica SA by 2012 as it raises money to finance the state budget.

Facing a growing need for cash, Romania is largely dependent on foreign borrowing to finance its investment plans.